Net Metering

Summary

*Note: The Public Utility Commission updated net metering rates on May 30, 2024, effective on August 1, 2024. In June 2024, the state legislature also instituted changes pursuant to H.B. 289 to the net-metering rules, including for group net-metering and excess generation, with changes to be made effective July 1, 2024.

Vermont's original net metering legislation was enacted in 1998, and the law has been expanded and modified several times. Any electric customer in Vermont may net meter after registering and obtaining a Certificate of Public Good from the Vermont Public Utility Commission (PUC). 

Hydroelectric, ground-mounted PV systems of up to 15 kW, roof-mounted PV systems, and mixed ground-/roof-mounted systems of up to 500 kW (where the ground-mounted portion has a capacity of up to 15 kW), follow shorter registration procedures laid out in PUC Rule 5.100. If the customer completes registration and complies with his/her electric utility interconnection requirements, 15 days after filing the registration form and receiving the certificate of compliance with the interconnection requirements, a Certificate of Public Good is automatically "deemed issued," and the customer may proceed with the installation.

A lengthier application procedure for a Certificate of Public Good is given to the following types of systems: ground-mounted PV systems that have a capacity greater than 15 kW and up to 500 kW, and mixed ground- and roof-mounted systems that have a capacity of up to 500 kW where the ground-mounted portion has a capacity that is above 15 kW. This procedure also applies to net-metering systems that use other eligible technologies besides PV systems and does not apply to hydroelectric or roof-mounted PV systems with no ground-mounted system.

Eligible Technologies

“Renewable energy” is defined as “energy produced using a technology that relies on a resource that is being consumed at a harvest rate at or below its natural regeneration rate.” Biogas from sewage-treatment plants and landfills, and anaerobic digestion of agricultural products, byproducts, and wastes are explicitly included. (The term "renewable energy" explicitly excludes solid waste that is not agricultural – except for silvicultural solid waste – as well as nuclear fuel, coal, oil, propane, and natural gas.) Qualified micro-combined heat and power systems of 20 kW or less that meet the statutory definition of a CHP facility and use fuel sources that meet air quality standards are also eligible; as well as energy storage systems (more information below). 

System Capacity Limit

Net metering is generally available to systems up to 500 kW in capacity that generate electricity using eligible renewable energy resources, including combined heat and power (CHP) systems that use biomass. CHP systems that use a non-renewable fuel are limited to 20 kW and must meet an efficiency standard. For schools and school district customers, the capacity limit is 1 MW (also applies to aggregate capacity).

Aggregate Capacity Limit

As of January 1, 2017, Vermont no longer has an aggregate cap on net metering. Previously, the cumulative capacity of net-metered systems was limited to 15% of a utility’s peak demand during 1996 or the peak demand during the most recent full calendar year, whichever was greater. 

Net Excess Generation

Any customer net excess generation (NEG) is credited at the blended residential rate and carried over to the customer’s next bill. The blended residential rate is the lowest of the following:

• For electric companies whose general residential service tariff does not include inclining block rates, the per-kWh charge in the company's general residential service tariff;
• For electric companies whose general residential service tariff does include inclining block rates, a blend of those rates determined by adding together all of the revenues to the company during the most recent calendar year from kWh sold under those block rates and dividing the sum by the total kWh sold by the company at those rates during the same year; or
• The weighted average of the blended residential rates for all Vermont electric companies (weighted by the annual retail sales of the electric companies.)

Any NEG shall be used within twelve months of the month earned; if not, it is granted to the utility with no compensation for the customer. Beginning January 1, 2017, credits may no longer be applied to non-bypassable charges. NEG from existing systems can be applied to reduce certain energy providers' (including those with fewer than 75,000 customers) renewable energy standard requirements.

System Size and Siting Credit Adjustors

Effective for customers filing a Certificate of Public Good beginning August 1, 2024, and ending July 31, 2026, credit adjustors will be applied to customer bills based on system size and siting. Adjustors are applied to all production, as measured by a separate production meter. Positive adjustors are applied for 10 years, while negative adjustors are applied in perpetuity.

The credit adjustors are as follows:

• Category I Systems (non-hydro facilities 15 kW or less) = Negative 4 cent per kWh
• Category II Systems (non-hydro facilities greater than 15 kW and less than or equal to 150 kW, sited on a "preferred site") = Negative 4 cent per kWh
• Category III Systems (non-hydro facilities greater than 150 kW and less than or equal to 500 kW, sited on a "preferred site") = Negative 7 cents per kWh
• Category IV Systems (non-hydro facilities greater than 15 kW and less than or equal to 500 kW, not located on a "preferred site") = Negative 8 cents per kWh
• Hydroelectric Facilities = 0 cents per kWh

A "preferred site" – provided that the site does not require significant forest clearing (i.e. clearing more than three acres) – means one of the following:

• A new or existing constructed impervious surface or structure whose primary use is not the generation of electricity
• A parking lot canopy over a parking lot
• A tract previously developed for a use other than siting a plant on which a structure or constructed impervious surface was lawfully in existence and use at any time during the year preceding the year in which an application for a Certificate of Public Good was filed
• A brownfield
• A sanitary landfill
• A gravel pit, quarry, or similar site for the extraction of a mineral resource
• A specific location determined by the governing municipal legislative body and the municipal and regional planning commissions as suitable for the development of a net-metering system consistent with applicable policies in their respective plans.
• A site listed on the National Priorities List provided development will not compromise or interfere with remedial action on the site and the site is suitable for the development of the plant
• The same parcel as, or directly adjacent to, a customer that has been allocated more than 50% of the net metering system's electrical output.

Renewable Energy Credit Ownership & Credit Adjustors

Beginning January 1, 2017, the utility owns the renewable energy credits (RECs) generated by a customer's net-metered system, unless the customer elects not to transfer ownership of these RECs at the time of application. Customers transferring RECs to the utility will receive an additional monthly bill credit for 10 years equal to $0.00/kWh multiplied by all kWh produced by the system during the billing period beginning September 1, 2022, and ending June 30, 2024. Customers electing to retain REC ownership will be charged each month in perpetuity negative $0.04/kWh multiplied by all kWh produced during the same period.

Prior to 2017, net-metered customers retained default ownership of RECs unless the customer elected to transfer ownership to the utility.

Interconnection

Utilities may require a customer to comply with generation interconnection, safety, and reliability requirements, as determined by the PUC, and may charge reasonable fees for interconnection, establishment, special metering, meter reading, accounting, account correcting, and account maintenance of net-metered systems.  For net-metered systems with a capacity of up to 15 kW, a net-metering registration form constitutes an interconnection application under PUC Rule 5.500; and the electric companies’ interconnection application review is governed by Rule 5.500. For systems that have a capacity that is greater than 15 kW, interconnection approval must be granted by the electric company before submitting a registration form.

Grandfathering

Net metering systems with a complete Certificate of Public Good application filed with the PUC prior to January 1, 2017 (as long as the application was filed at a time when the electric company was accepting net metering systems, based on the state's former aggregate capacity limit) are grandfathered under the state's former net metering rules for a period of 10 years from the date of the system's commissioning. For this 10-year period, credits may be applied to all bill charges, including non-bypassable charges. Following this period, customers will be credited for NEG at the blended residential rate and may not apply credits to non-bypassable charges. Grandfathered systems are not subject to any REC or system size/siting credit adjustors.

Group Net Metering

Vermont allows “group net metering." In order to set up such a net metering system, the group must file with the PUC and other relevant parties, the following information:

• The customers and meters that are to be included as part of the group;
• The method for adding/removing meters and information regarding credit allocation to each customer meter;
• The contact person responsible for communications, but not those related to billing, payment, or disconnect; and
• A dispute resolution process.